Student Life

What is CSR?

CSR or corporate social responsibility is one of the most commonly used terms in the real world, even for those who are not linked to the business world.

I would actually describe CSR as one of the many buzzwords present in the field of business or management as a whole. You might wonder why, considering it is supposed to be a term related to doing responsible business. Hold your thoughts folks as I explain it, based on the knowledge I gained from the CSR and the Challenge of Business Ethics module in the MBA.

Evolution of social responsibility

Great Britain is strongly connected with the birth of the industrial era and industrial revolution. During this era, many factories and work establishments were established. These factories, once initiated, did not remain just as stand-alone businesses. Instead, they developed the nearby communities with the creation of facilities for their employees such as schools for their children, hospitals or medical facilities for their welfare. In other words, they were largely contributing to the community as a whole, rather than just providing jobs and income generation for people. After the World Wars, this practice underwent a lot of transformation and started being referred to as the social responsibility of business.

Interpretations of CSR

Unfortunately, over time, this broad terminology has been perceived differently by individuals and organisations around the world, resulting in different motives and meanings regarding the idea of being socially responsible. This confusion has now reached a state where some organisations deploy CSR primarily for the sake of generating maximum profit, or as a deceptive tool, most alarmingly when it is used for political gain.

This poses the question: is CSR now deployed mainly for creating wealth and/or to assume a political role?

CSR as a wealth creator

Unfortunately, rising competition in the integrated global economy has created a mindset within some organisations in today’s information age where CSR is deployed as a tool to gain a competitive advantage.

Ironically, the strategy for this method of profit maximisation was developed by one of the world’s renowned Professors, Prof M. Porter from Harvard, who described this approach as ‘creating shared value’ (CSV).

However, since this strategy was very much conducive for good business, several major MNCs such as Nestle, Coca-Cola and others deploy this approach. To illustrate why I consider CSR to be a buzzword, let us delve into Nestle’s CSV: they promote the idea of providing healthy products for a healthy lifestyle, but in reality, this has been alleged to be deceptive, brought to the limelight by a recent FT report which claimed almost 70% of Nestle’s products are unhealthy!

CSR for political gain

If we observe the global economy today, almost all major firms are spread across the world. This has caused a major issue for all governance bodies, making it very difficult in practice to ensure the responsible behaviour of corporates, due to the different regulations.

This perplexion has resulted in the creation of firms claiming to be responsible on their own, and contributing to community and cluster developments in the developing and emerging world. Was this practice done to be responsible? Not at all!
This was just a ruse deployed by some corporates to create legitimacy and assume a political role in governance. I would clarify here that this political role is not lobbying, which is legally practised in the western world, but assuming a role in governance.

To illustrate this, here are two examples:

  • When corporates assumed a role in the World Trade Organization (WTO) governance, they played a dominant role in ensuring that Trade-Related Aspects of Intellectual Property Rights (TRIPS) serve the business world and not the community. Because of this, several low-income countries across the globe are craving patented drugs and medicines, thereby creating social injustice rather than social responsibility.
  • In another instance, when corporates assumed a political role, they sabotaged the UN sustainable goal of international tax dodging and prevented it from being implemented. If this goal had been brought in, then several organisations would have been liable to pay more taxes which could have been used for the development of society at large.
    Now I hope you might agree with why I called it a buzzword!

Meaningful CSR

Unfortunately, we have evolved from an industrial era where we had fewer people and more resources. In today’s information age, it is my opinion that almost all corporates are self-centred and CSR is being used as a deceptive tool to gain profits and create a reputation rather than offer a meaningful contribution.

For corporates to contribute meaningfully, they need to accept that there are few resources and more people, and therefore fundamentally change their metrics – from the financial bottom line to a triple bottom line – where the contribution to the planet and society is given primary agenda and then the economic agenda is considered for the common goal of co-existence.

Lastly, for corporates to become meaningful contributors to society, we the people (consumers) should not fall prey to deceptive CSR stunts, but instead research and buy products with awareness, using our economic power to create an imperative need for corporates to shift CSR from being a buzzword to being meaningful.

Read more of my MBA Perspectives

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